Clean coal push marks reversal of UK energy policy

Decision not to allow any new coal-powered plants to be built in Britain without carbon capture represents a major victory for the new Department for Energy and Climate Change and green pressure groups

No new coal-fired power stations will be built in Britain from now on unless they capture and bury at least 25% of greenhouse gases immediately and 100% by 2025, the climate change secretary, Ed Miliband, announced today.

In a reversal of energy policy which represents a major victory for the new Department for Energy and Climate Change and green pressure groups, the government will direct the building of four energy "clusters", generating a total of 2.5GW of electricity, on the east coast of Britain.

Each cluster will have at least one major new coal-fired power station able to collect carbon emissions and transport them out to sea, where they will be buried in redundant oil or gas fields.

The new power stations, the first to be built in over 30 years, are not expected to come onstream until 2015. They will be sited in the Thames Gateway, on the rivers Humber and Tees and in the Firth of Forth in Scotland, with a possible fifth on Merseyside. The government envisages oil and coal companies linking to reduce emissions from coal-powered electricity generation by up to 60% by 2025.

Demanding carbon capture and storage (CCS) on all new coal plants is expected to cost around £1bn for each plant and increase energy bills. Government and energy companies are in talks over how these will be funded but it is expected to come from a levy on all fossil fuel electricity generation in Britain. This could put 2%, or roughly £8 per household a year, on a consumer's electricity bills by 2020. Other funding alternatives being considered are to pay the energy companies according to how much carbon they store underground.

Earlier today, Ed Miliband said that Britain planned to lead the world in clean coal technology. This is expected to become a global industry in the next 50 years as countries commit to reducing carbon emissions to combat global warming. Coal is the dirtiest of fossil fuels but provides at least one-third of the world's electricity.

"There is a massive gain we can benefit from by being in the front of this revolution. We need to signal a move away from the building of unabated coal-fired power stations because it is right for our country to drive us towards a low-carbon [economy]. The change starts now," he said.

Environmental groups found themselves in the unusual position of joining the Confederation of British Industry (CBI) in hailing a government initiative.

"At last Ed Miliband is demonstrating welcome signs of climate leadership in the face of resistance from Whitehall officials and cabinet colleagues. He is the first minister to throw down the gauntlet to the energy companies and demand they start taking climate change seriously," said John Sauven, Greenpeace UK's director.

"This time last year energy issues were being decided by tired ministers in thrall to regressive civil servants. Now we see hints of real climate leadership."

But he added: "Very significant questions remain unanswered, with environmentalists concerned that emissions from coal could still be undermining Britain's climate efforts for years to come. For every tonne of carbon captured and buried from new coal plants before the 2020s, the government seems happy to see three tonnes released into the atmosphere. Until there is a cast-iron guarantee that new coal plants won't be allowed to pump out massive amounts of CO2 from day one, our campaign continues."

The announcement will have the effect of delaying a decision on the go-ahead for a major new coal-fired power station at Kingsnorth in Kent for at least another year, but it is not expected to stop major climate change protests over coming months.

Miliband said it was technically not possible to insist on 100% carbon capture and storage immediately. "Some people will say that Britain needs 100% carbon capture and storage from day one, but this is not practical, affordable or right. The technology must be shown to work on a large scale. If it leads to no new coal-fired power stations going ahead it would be a dramatic failure of leadership. 2025 is a practical."

Environmentalists have run a two-year campaign against new highly polluting coal plants, with attention focusing on E.ON's plans to build the new plant at Kingsnorth. The German utility submitted plans for a normal "unabated" plant, and came within weeks of being given permission by energy secretary John Hutton.